Steady growth driven by PCB and IC substrate: Better product mix to underpin margin expansion

研报英文原文证据摘录

Steady growth driven by PCB and IC substrate: Better product mix to underpin margin expansion

Global Markets Research

Shennan Circuits 002916.SZ 002916 CH 17 July 2026

EQUITY: TECHNOLOGY

RatingSteady growth driven by PCB and IC substrate Remains Buy

Target price

Increased fromBetter product mix to underpin margin expansion CNY 518.00 CNY 391.00

Action: Maintain Buy but raise TP to CNY518, implying 42.3% upside Closing16 July 2026price CNY 364.00

Shennan Circuits (SCC) issued a strong 1H26 profit alert on 14 July, setting a net profit

guidance of CNY2.1bn-2.3bn (+54.4%-69.1% y-y) that translates to CNY1.25-1.45bn (+44%- Implied upside +42.3%

67% y-y or +47%-71% q-q) in 2Q26F. We think the solid 2Q26F performance was mainly

driven by strong demand for AI PCB and BT-substrate, from server, switch, optical transceiver Market Cap (USD mn) 36,637.6

and memory customers, in our view. Moreover, we think the company has significant room to ADT (USD mn) 766.0

grow in the high-end product segment (i.e., ABF-substrate), driven by rising demand from

domestic AI chip and memory customers. We raise FY26-28F revenue forecasts by 3.2%- Relative performance chart

10.7% to reflect stronger demand, and we raise FY26-28F earnings forecasts by 9.9%-18.7%,

considering its better product mix and improved profitability from the substrate segment. We

maintain our Buy rating, and raise TP to CNY518 (from CNY391), based on 43x FY27F EPS

of CNY12.05 (previously 37x), in line with an FY26-28F earnings CAGR of 43%. The stock is

currently trading at 30x FY27F EPS.

PCB: high-end optical transceivers, network switch and AI servers are key drivers

and differentiate company from peers

We believe SCC is one of the key suppliers of optical transceivers in China. Its strong